“With the rising trend of yen against the dollar, it was feared that Japanese exports would be badly affected. On the contrary, the demand for Japanese goods, especially automobiles, continues to remain steady,” Yuji Nakamine, managing executive officer and general manager of Mazda Motor Corporation’s overseas sales division, told Arab News in an interview on the sidelines of the Mazda Brand Forum here earlier this week.

“Of course, the rising yen has affected car exports of some Japanese brands, but the automotive industry will surely recover soon. This is because the image of various brands is improving with the new generation of cars being manufactured,” he said, adding that the Japanese brand remains strong, more so because of its consistent investment in research and development (R&D).

“In our case, Mazda, whose manufacturing operations remain in Japan, continues to invest in its R&D, which is resulting in improving its cars qualitatively and competitively,” said Nakamine who oversees some100 markets worldwide including Saudi Arabia and the rest of the Gulf. “We have to continue to invest in technologies. Sales maybe down by 10-20 percent due to the impact of the worldwide economic crisis last year, but we recovered quickly,” he said and quoted Mazda’s improved financial results of the fourth quarter of 2009 to substantiate his statement.

“However, if the appreciation of yen continues in the future then we may have to take certain steps so that our exports are not affected. In that case, we may have to diversify our car production outside Japan. We already have facilities of manufacturing automobile parts in countries including the United States, Thailand and China.

“Cost reduction and fuel efficiency improvement are the ‘magic words’ that we started translating into reality. Additionally, we resorted to some short term actions that were aimed at generating demand for our vehicles,” Nakamine said. “Our long term goals are aimed at increasing our investment in R&D, possibly $1 billion a year, so that our investment and manufacturing go hand in hand.”

He agreed that mergers and acquisitions in the automobile industry worldwide were increasing in the past 20 years. “But even in such cases, individual brand identities should be protected and preserved and they should be free to make the kind of vehicles of their choice. For instance, in the case of Mazda, which is celebrating its 90th anniversary, we will continue to add new features and technologies to our zoom-zoom concept, which has remained successful in the past 10 years. One of the advantages of our philosophy has been to realize the best fuel economy and our goal is to further improve our vehicles with 30 percent fuel economy by 2015,” Nakamine said.

One glaring example of recovery has been Japan’s exports of cars, trucks and buses, which increased 22.5 percent in August. Exports have been rising for the eighth month in a row. Although exports to North America are declining, those for Europe, Asia, the Middle East and South America are rising. They are buying Japanese cars with a vengeance, according to the Japan Automobile Manufacturers Association. Japan exported 337,163 vehicles in August, up from 275,186 vehicles in the same month a year earlier. A strong yen has cut the value of repatriated profits for some Japanese exporters and makes their products less competitive abroad.

The yen in September strengthened about nine percent against the dollar from the same period last year. The dollar averaged  84.66 yen in September. It is now trading around the 81 yen level, nearing a post World War II record low of 79.75 yen set in 1995. The rising yen will continue to squeeze Japanese exports and pressure earnings of Japanese exporters. Exports to China, Japan’s biggest trading partner, increased 10.3 percent in September from a year earlier.

The September figure underlined weakening global demand for Japanese goods. Earlier in the year, Japan’s exports enjoyed stellar 50 to 60 percent growth as they bounced back from the previous year’s slump amid robust growth in Asia. Waning foreign demand poses a serious risk to Japan’s export-led economy. Exports alone account for around 15 percent of Japan’s economic growth.